This paper presents the NICE fairy-tale game system, which enables adults and children to engage in conversation with animated characters in a 3D world. In this paper we argue that spoken dialogue technology have the potential to greatly enrichen the user’s experience in future computer games. We also present some requirements that have to be fulfilled to successfully integrate spoken dialogue technology with a computer game application. Finally, we briefly describe an implemented system that has provided computer game characters with some conversational abilities that kids have interacted with in studies.